Days before its Budget, the Haryana government has announced it is under severe stress, its finances in a shambles, prompting it to look for new income sources and cut expenditure.
Persistent increase in the tied expenditure has put the state's finances in shambles. According to sources, the government is set to open new windows of revenue mobilisation and cut the unproductive expenditure to push the state's economy on to the growth track.
Releasing a White Paper on the state's financial health on Monday, Chief Minister Manohar Lal Khattar and Finance Minister Abhimanyu Singh said the previous government - Congress was at the helm for 10 years - put a thrust on the creation of social infrastructure but the state did not plug the leakages in expenditure and registered a tax buoyancy.
Bharatiya Janata Party will present its maiden Budget in Haryana on March 17 and there have been indications that the state may announce new taxes and raise the existing ones to mobilise additional revenue.
According to Singh, the percentage of tax revenue to GSDP declined from 7.8 per cent in 2004-05 to 6.6 per cent in 2013-14. The percentage should have ideally gone up. Even if it had been sustained at the same level, the state would have earned an additional revenue of Rs 20,000 crore. The previous government has been using most of its receipts on non-Plan and ad hoc expenditure.
During the ten-year period, he added, about 90 per cent of the receipts were spent on revenue expenditure and 10 per cent on capital expenditure. It indicates that uncontrolled growth in revenue expenditure came in the way of a sustained growth of capital expenditure.
The state budget may earmark substantial funds towards primary sector in Haryana as the finance minister indicated that it employs 51.3 per cent of the workforce and contributed only 15.3 per cent to the state GDP in 2013-14. The state government is mulling policy interventions that enhance the productivity of the primary sector. The interventions would revolve around diversification into horticulture, floriculture, dairy farming and tapping the huge Delhi market, he added.
The expenditure of the states under power subsidy and education have gone up drastically. The estimated power subsidy of the state in FY 2013-14 is 5338.5 crore and the per student expenditure on student (education sector) is about Rs 1,300.
The state is also likely to miss the value added tax target of Rs 19,930 for the FY 2014-15 in the wake of subdued crude oil prices and a slowdown in the economy.
The higher devolution of funds from centre may give some relief to the state but the concerned officers are not clear about the allocation of funds at the state level.
